Q&A: Can I pay VAT monthly?

Q. I have recently voluntarily registered for VAT. I understand that I will usually need to pay VAT to HMRC each quarter, rather than receiving a refund. However, I have concerns about running up arrears in case I experience cash flow issues. Can I complete monthly returns and make monthly payments instead?

There is no statutory right to be able to make monthly, rather than quarterly, returns. The legislation simply permits HMRC to allow a business to do so. The problem is that HMRC generally won't permit you to use monthly filing in the case where you only have VAT to pay. This is for businesses that usually receive repayments. 

You have two options to help prevent building up arrears. First, you could simply make a monthly payment of the estimated net VAT position to your account and calculate the difference out when you complete the VAT return.  The other option is to use the VAT Annual Accounting Scheme. This is a means of paying VAT that involves filing only one return, but you’d make nine payments on account during the year. Information about the scheme is available on the gov.uk website here.

About the Author

Paul Newbold

Partner

After qualifying with KPMG where he gained significant audit experience, Paul joined Torgersens in 1991 and became the firm’s audit partner in 2000. Paul employs his broad range of financial skills to provide commercial and accounting advice to a range of owner-managed businesses in the independent retail, education and professional services sectors. He also has extensive experience dealing with charities, Registered Social Landlords and not-for-profit organisations and co-operatives.   Outside of work, Paul likes to visit Eastern France and South-West German and read novels by David Morrell, Michael Blake and Harper Lee. He also likes watching films, his favourite is The Shawshank Redemption.

To get in touch please e-mail paul.newbold@torgersens.com.